Big News for Mortgage Rates

The big news of the day is the FOMC meeting that will adjourn at 2:15 PM. Many think the Fed will break the streak of rate hikes by pausing at this meeting. If they do make another quarter point increase without signaling it to be the last, I expect to see the markets drop sharply, pushing mortgage rates significantly higher this afternoon.

Tuesday’s bond market has opened down slightly following this morning’s economic news. The stock markets are showing early gains with the Dow up 40 points and the Nasdaq up 6 points. The bond market is currently down 3/32, which will push this morning’s mortgage rates higher by approximately .125 of a discount point in expectation of the FOMC meeting results.

If they do pause at this meeting, whether or not the markets react favorably or negatively likely depends on the post meeting statement. If it appears to only be a short pause meaning more rate hikes are expected, we could see bond prices drop and mortgage rates rise this afternoon and tomorrow morning. For the markets to react favorably to the news, I think we need a pretty strong hint that the Fed has shifted to a “wait and see” mode meaning that they aren’t sure if more rate hikes will be needed.

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a comment

You must be logged in to post a comment.